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Aramco leases gas pipeline network to BlackRock & Hassana for SAR 58 billion

Fitch affirms Saudi Aramco's rating at A

The Saudi Arabian Oil Company, or “Aramco,” signed a $15.5 billion (SAR 58.1 billion) leasing and leaseback deal with a consortium led by BlackRock Fixed Assets Company “BlackRock” and Imsanah Investments – the investment management arm of Saudi Arabia’s General Organization for Social Insurance – that includes the Kingdom’s gas pipeline network, making it one of the world’s largest energy infrastructure deals.

The agreement marks a significant step forward in Aramco’s asset enhancement initiative, since it is the company’s second of its sort this year, after the conclusion of an infrastructure transaction for the company’s crude oil pipeline network in June.

According to a statement released by the firm today, Aramco will receive around $15.5 billion in income upon completion of the gas pipeline agreement, which will help the company improve its financial condition. The acquisition adds value to the company’s diverse asset base, draws a wide range of investors from around the world, and emphasizes excellent investment opportunities as part of the deal.

For 20 years, the newly formed Aramco Gas Supply Company will lease and lease back use rights in Aramco’s gas pipeline network. In exchange, the firm will receive a charge from Saudi Aramco for gas products that flow via the network, with the price being tied to the gas flows at a minimum. Aramco will keep a 51 percent share in Aramco Gas Supply Company and sell the remaining 49 percent to a group of investors led by BlackRock and Hassana Investment Company.

Saudi Aramco will retain full ownership and operational control of the pipeline network, and this deal will not impose any production volume constraints on the firm.

The deal is expected to close soon after mortgaging and satisfying the usual closing conditions, such as the appropriate merger controls and getting the necessary permissions and permits.

“This big investment contract is one of the primary parts in Aramco’s goal to establish a larger and stronger business system in the gas industry, which is one of the major development drivers in the company’s business,” said Amin bin Hassan Al-Nasser, President and Chief Executive Officer of Saudi Aramco.

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